We have recently seen an influx of consumers calling about Credit Acceptance Corp., a creditor that specifically pursues consumers for automobile repossession debt. The case is often that a friend or family member thinks they are doing a favor by co-signing on an auto loan. Instead when the payments are defaulted on and the car is repossessed, that same co-signer who thought they were being a good friend or family member ends up with the short end of the stick.
What co-signers don’t know most of the time is that they are just as liable as the purchaser on whatever it is that they are financing. The common argument of it isn’t my car or I never even drove it doesn’t apply as the co-signer takes on the same liability as the purchaser. With auto-repossession cases in particular, the purchaser defaults on the payments for long enough when the lender decides to repossess the car. Then the car is sold at auction, usually for much less than what it is worth. Finally, the bank or creditor will then pursue the consumer and co-signer for the deficiency balance of the debt that was not covered by the sale of the car. A lawsuit is usually filed and a default judgment obtained. Quite often the co-signer is pursued particularly because they are in a better financial situation than the purchaser which is why they were needed in the first place. The purchaser usually has little to no assets or disappears entirely leaving the co-signer to deal with the matter entirely.
Credit Acceptance Corporation is a creditor that specifically focuses on auto repossession debt and almost always retains the law firm of Lyons, Doughty, & Veldhuis to sue consumers and obtain judgments against them. Judgments open consumers up to wage garnishment, bank levies and property liens and devastate the consumer’s credit. In New Jersey these cases are very common and they mostly consist of default judgments in which the consumer was never aware of the lawsuit.
We have been very successful at having default judgments by Credit Acceptance and Lyons Doughty vacated based on the poor service of process performed but more importantly have been able to diminish or expunge the underlying debt allegedly owed by co-signers through aggressively defending these actions or through a low negotiated settlement.